Posted
by
Zonkon Thursday June 23, 2005 @10:56AM
from the your-g-branded-online-wallet dept.

didde writes "Reuters is reporting on statements that Google's CEO Eric Schmidt had made regarding Google's upcoming payment system. Apparently they're not looking to compete with PayPal." From the article: "Schmidt said Google does not intend to offer a 'person-to-person stored-value payments system' like PayPal's, in which money briefly resides in PayPal's control during the transaction, but he did not give details of how the Google system would differ."

Perhaps Google is looking to compete with Amazon or iTunes, or even eBay possibly? They may just be creating another pay-pal type service, but I think it's much more likely that they're creating a subsystem to pay for something else they will offer.

...This just spawned another idea in my head..heh... I wonder what Apple would think if people started reslling their music they downloaded from iTunes on ebay;P lol

I'm sure there's something in iTunes' service agreement that would prevent this, but it's a funny thought none the less. And more importantly, is it even legal for someone like Apple to take away your rights to resell something you bought from them???

I don't know about regulation in the US, although I note that PayPal is licensed in some way or other in the majority of states, but PayPal UK is regulated by the FSA as an electronic money institution.

Maybe, but I doubt they are going to try to compete with your bank either. PayPal is in a very lucrative market and need some competition to keep them honest. I think Google's just testing the waters - not declaring all out war yet. If they can get a foothold, they would love to get PayPal's revenue streams.

Those paypalsucks people have been very strident in the past. Just to a positive note out there, I've used paypal for years and have never had a single problem with them, both as a buyer and as a seller.

My bet is that they're going to take another stab at micropayments. Only they won't call it that, because micropayments are one of those things "everybody knows" won't work.

Why should Google want to do micropayments? Because Google is in the content business. Right now, online content is sustained mainly by advertising, with a few sites selling subscriptions. Not all content is advertising-friendly, and most content isn't subscriber-friendly. Newspapers, for example, don't make enough from online adverti

An online only credit card of course? I'm thinking Google might actually be offering to hide your credit card for you. Like the paypal system, except no money will reside in Google's control. You give them your credit card and bank number and they debit and credit you money without being in their control.

The advantage to this is that you don't have to give your credit card number out to anyone, and them having your Gaypal id won't let them do anything (except to try to guess your password or give you money

Actually in business it's called a float. Any kind of a system that ensures money going in and out, with some time delay, produces a beautifully huge float of cash that a company can then leverage for investments. Free money is good and companies can create a flow of free money for themselves in many ways.

The insurance industry is entirely based on this, for example. The "insurance" aspect is a side issue. The constant inflow of money, and delayed outflow of money (after some is fraudulantly held back of c

I think Slashdot is the only place I can visit where "Please compete with paypal. Paypal need a competitor." gets the highest praise of the moderation system. I guess if cavemen had a website they posted to I wouldn't be able to say this.

If you are in Canada and want to send money back and forth online, all the major Canadian banks have an agreement that allows you to transfer cash to another account. It's an Interac-like system, see Certapay [certapay.com]. Why isn't something like this available across the border, so we could send money throughout North America like this? Seems beautiful to me.

On the vendor side, if you are trying to sell your own arbitrary goods, then 2CO [2checkout.com] might work out for you.

Most likely bet is that they're creating their own currency, called (say) Gbucks, which can pass instantaneously from one user's account to another, and can be cashed in for real money with Google whenever you want to.

Converting real cash into fake cash gives the fake cash a real value and thus makes it into real cash.

In other words, if I buy a Gbuck and send it to a friend and they convert it back to whatever it is worth in cash, how is this any different than what paypal does, realistically?

If they create their own currency and decide not to tie it in a fixed way to another currency, then that's interesting, but doesn't change the fact that it's still them accepting one currency for a temporary period of time.

It also introduces the problem of fluctations of the new currency. People buy Gbucks, wait for them to be worth more real bucks, then cash out. Google is now out a ton of real cash. This is done with real cash all the time, but making it easy to convert between currencies will make this simpler. Only way to combat this that I can see is for google to implement a conversion fee to stabilize the fluctuations, which will discourage the currency from taking off in the first place.

First it needs an escrow which would enable greater trust between transacting parties. It also needs the ability to reverse a payment for when transactions are not fulfilled to satisfaction.

Paypal has the first, but the second leaves much to be desired. Once the payment is made, there is little recourse if it turns out that the transaction was bogus. If Google can implement something like this, it would push it way over the top.

Schmidt said Google does not intend to offer a 'person-to-person stored-value payments system' like PayPal's, in which money briefly resides in PayPal's control during the transaction

Well what about a 'person-to-person stored-value payments system' like PayPal's, in which money doesn't briefly reside in Google's control during the transaction but rather gets directly transfered to the merchant.

I personnally have always thought that PayPal's way of doing it (keeping the money in your 'PayPal account') was pretty lame.

"Buffering" money in Paypal is how they make money. Unless you have an account sweep setup (read Paypal Hacks) then you will have money in your account after each transaction. That money collects them interest, unless you use the paypal money market fund.

If you never withdraw that money, that's their profit. If you pay fees for a person-to-person transaction and the money is already in paypal ("buffered") they don't have to pay fees to initiate the transaction. That money is profit.

"Schmidt said Google does not intend to offer a 'person-to-person stored-value payments system' like PayPal's, in which money briefly resides in PayPal's control during the transaction, but he did not give details of how the Google system would differ."

I guess they could just facilitate payments directly from one persons bank/credit card to another, and take a cut of the transaction...act as a middle man without storing the money. OH and they'd totally use AJAX to do this.

I believe they are only looking for the ad revenue. This is their cash cow. And they are not too greedy. Ofcourse being not greedy helps them conquer markets. Just like MS was in the beginning was far more interested in increasing their market share instead of making sure that everyone had a legitimate copy. We are a long time off from where Google would think that the market is not growing at all and they can only gain more money by screwing their customers.

Ah yes, I *want* to spend my day thinking "hmm... is it worth 2 cents to me to read this article? Here's one over here for just a penny..." You should read this: the best article about micropayments ever written [openp2p.com], and another one just in case [shirky.com]. The problem with micropayments is *not* the technology. It's that nobody wants them. Period. (OK, maybe not "nobody." But, say, 99%+ of the world. Close enough.)

Lots of people want micropayments. Credit card sales typically cost small merchants $0.30 + 3% of the total. If you want to sell an mp3 for $2 you'll pay 18% of that in fees. Sell a whole album of mp3's for $10 and you'll pay 6%. Credit card processing is nothing but a scam -- I for one am open to any alternatives that a big player like Google can come up with.

They may have to skip the beta this time. I don't think I'd trust a pre-release version of the software to transfer money.

me: I transferred 100$ for his pog collection. Where did it go?

google support: But it's beta! And Beta means we can fuck up from time to time!

Also -- not competing with Paypal because they aren't going to store money? Sure, but won't google add that functionality the moment it becomes commercially advantageous? Not to mention the fact that I think for most people, an instanteous credit to your credit card (or bank account or whatever) when you get paid for you antique pog collection is not such a bad thing.

Final thought -- for every post in this thread complaining about the number of Google stories on/. -- God kills a kitten. What -- prove me wrong.

Even worse is the way paypal tricks you into "upgrading" your account to accept credit card payments rather than just "eChecks" and is sorta vague on the fact that after the "upgrade" you have to pay fees on credit card transactions and echeck transactions (which you didn't have to pay fees on before).

Schmidt said Google does not intend to offer a "person-to-person stored-value payments system" like PayPal's, in which money briefly resides in PayPal's control during the transaction, but he did not give details of how the Google system would differ.

Even though companies are out to make money and occasionally have to step on the toes of another company if they want to turn a profit, it's nice to see that not all computer business is so cut-throught. Maybe Google has realized that a little healthy competition is good, but more than likely they have slightly different aims or are trying to tie it in more with the rest of their services in a way that paypals method doesn't work.

Companies need to realize that crushing the competition and taking control of the market isn't going to be healthy for the consumer. Look at some of Microsoft's (Not to pick on them, but they're an obvious example) products like Internet Explorer. For a while it was the best browser around to many people, but after it gained control , Microsoft stopped upgrading it and fixing it, making it a rather sub-par product today.

To those of you who say that Google or any other company wouldn't fall into the same trap if they gained market dominance is plain ignorance. Go ahead and root for Google, Apple, Sun, AMD, or any other underdog company, but just remeber that they're as capable as being as evil and ruthless as some people feel that Microsoft, Sony, Intel and other industry leaders are today.

Refreshing change? I interpret what Google's CEO said as "we won't just compete with Paypal". Sounds to me like they don't want to be pigeon-holed because they are far more ambitious than that. Perhaps they are gunning for the place currently occupied by credit card companies and processors?

Even though companies are out to make money and occasionally have to step on the toes of another company if they want to turn a profit, it's nice to see that not all computer business is so cut-throught.

It's not indicative of Google's shiny, happy attitude so much as a symptom of their innovative strategy. Google usually doesn't get involved in a game unless they have something really unique to offer. Their innovation is truly more than just cherry-picking the best features off of competing products.

To quote the article "The payment services we are working on are a natural evolution of Google's existing online products and advertising programs, which today connect millions of consumers and advertisers"
So an advertiser can give you 5 bucks off if you buy from them. Or maybe reward points to use in the network.

gMoney: give us money and we'll immediately distribute it to our advertisers. then use our web search to find your money by searching for the products you desire. if you find and order the right products, you'll receive a $5 coupon for your next purchase.

those $5 coupons add up to your initial investment. at which point you pay more money.

gah, forget it. this is just to convoluted to be funny. though I did work gMoney into it...

the search correlation is that they can now separate the link-clickers from the product buyers. Further, they can gauge your spending habits and further target ads to maximize effectiveness. Your mom's birthday is in august, let's say, and you always buy something online around that time to get over to her. They can target mom-like gifts around that time, increasing the liklihood of the purchase, and they get cash off the transaction, the clickthrough, and the sale. I think anyway.

Then they start creating a database of faithful online shoppers and start charging premium prices to advertise to that crowd.

You're totally right. It all has to do with the information. The don't actually handle money, they assume none of the liability, and they don't have to expand into a core business that is not an intrinsic strength.

the search correlation is that they can now separate the link-clickers from the product buyers. Further, they can gauge your spending habits and further target ads to maximize effectiveness. Your mom's birthday is in august, let's say, and you always buy something online around that time to get over to her.

This all assumes that most online buying will go through Google. That's highly unlikely. My credit cards work perfectly well for buying stuff online and it will be awfully hard for Google to persuade me

Well, one improvement over PayPal would be global coverage. Just few days ago I was very impressed by a nice piece of software (mp3splt [sourceforge.net], BTW), and I decided to donate some money to the corresponding Sourceforge project via PayPal. Half way through I found out that my small European country (Croatia), was not covered by PayPal services.

Global coverage would be great... but that's much easier said that done. Don't forget that you get into international banking rules, international politics and a ton of other stuff when you send money internationally. With all the beefed up anti-terrorism efforts as of late, I think sending money internationally is going to have a few hurdles to it.

Because there are a lot of Nigerians and Russians out there with a list of "reasonable credit cards".

That's not all of it, because there's plenty of stolen credit card numbers in the US and similarly covered countries. I suspect it has to do more with ability to investigate and/or litigate fraudulent charges, rather than just the fact that they charges could be fraudulent.

Rather than being a pure paypal replacement, why can we assume google is going towards micro payments. Follow me here, google searches open web pages, but also some closed databases (AP,NYT etc). You get a snippet of the result, to read the complete document, you click the link, google deducts $0.02 from your 'wallet' and shows you the page. Google pays WSJ $0.018 and pockets the rest.

At the end of the day, you are happy because you got to read the article for $0.02, WSJ is happy because they didnt have to bother about managing subscription (which you were unwilling I assume) and still got the $0.018 and google of course, got the $0.002. Everyone comes home ahead. Many have tried micropayments, but if there is anyone who can do it, it is google

It could be, but I'm finding it hard to imagine a micropayments strategy that couldn't be described as "person-to-person stored-value payments system".

Micropayments for reading articles are person-to-website rather than person-to-person, but the former would be adapted to the latter really, really quickly, at least if they allow anybody who sets up a web site to be a payee. But maybe not; I'll get back to that in a second.

And micropayments are usually "stored-value payments systems", because the best way to reduce the overhead is to give the central guys $20 and have them shift $.02 from one account to another (which is cheap) and only occasionally turning it into real money (which is expensive). Of course that's effectively what Paypal does.

Perhaps I'm misreading Schmidt's statement, but it just doesn't sound like micropayments to me. At least not generalized micropayments. You may be spot on with the limited notion, where the only valid payees are large corporations like the New York Times. It would still be a stored-payments system in all likelihood (you just can't charge $.02 to a Mastercard), but the asymmetry might make it profitable.

My main problem with Paypal is that Paypal has every right to say "go fuck yourself" if something goes wrong or a customer gets screwed. Credit card companies cannot do this. If I don't get my merchandise, I can issue a charge back and get my money back. With paypal it's a crapshoot as to if I get my money back. Paypal has also been notorious for taking money from people's accounts without authorization.

Credit card companies are bastards, paypal is full of bastards, but credit cards are regulated. Bastard or not, as a consumer I want to be able to tell a company "go to hell" if they try to screw with my money.

Maybe it is... we don't know yet... As someone else pointed out here, this system could be used for micropayments towards the subscription sites that are not usually accessible. Thus google makes more content available to you that you wouldn't want to sign up for normally.

I am positive I have it all figured out.
Google has searching, and offers up ads on the side for products. Google has Froogle, a searching service which indexes store products for display as well. Well, think about the next logical step...
Google will provide hosting and payment services for people and companies selling products. Consumers will love it because their CC # will be going through Google, which they trust, versus a small site. On top of that, consumers will be able to find what they are lookin

This is damning to the banking industry. The age where they can get away with bank charges should be dead and burried. The idea that there are 10s of clerks monitoring each transaction, and therefore incurring a service fee is archaic and false. We are now paying to maintain a computer system, which if it was commisioned properly should have its costs covered by the interest they gain from investments they make with the money the hold for their clients.

In the UK at least, consumers are free to transfer money between accounts for free. But it takes between 3 and 5 days so they can gain interest (what were they doing the previous x days when it was in my account?). Businesses are routinely charged £0.20 a transaction and the transfers still take 3 to 5 days!!! How is this fair?

Banks have enough ways to generate money without charging buisnesses for micropayments.

(Disclaimer: I work for a payment processing company, First National Merchant Solutions, so the fees you're advocating against are what keep me fed and pay my bills. I'm naturally biased toward a system that keeps me employed, but I have other interesting insights into payment processing which people outside this industry might not have.)

There's one important component of payment processing you're missing. If it weren't for this component you would be completely correct, so I'm pretty sure I've identifi

I can see a gmoney app - bye-bye quicken and ms-money. I could also see google starting a "virtual" bank -- no storefront, but you can still have an account (probably as a wholly owned subsidiary due to banking regs)..

But, what I really hope their new system might be... something to compete with paytrust (gpay?). I used to love paytrust, but through a series of aquisitions the website/app -- as well as customer service -- has gone downhill. Don't get me wrong, I still like and use them, but they've lost my loyalty as a customer.

For anyone who doesn't know -- paytrust is an online bill payment service, kinda like what your bank probably already provides. Except you can have all your paper bills sent to them, and they capture most of your electronic bills too, so that you can then send payments all from one place, schedule them to be paid automatically, etc.

Let's take SecondLife as an example. They have a monetary system in the game that allows you to convert dollars into their units of trade and transfer those units for goods. The sellers of the virtual goods can then transfer the units back to real-world cash. They aren't a bank, they're a game, and you're paying for extra "credit" in the game, not transferring money into a different unit.

If Google were to take advantage of that, we should consider what this would mean if we could hook it into email systems. Let's say you have to have an "account" with them in order to send email to me. I can set up accounts and give them to my friends. You have to transfer $.25 from your account to my account in order to send mail to me. If you aren't sending junk mail to me then I immediately refund the money. If you are, then I keep the money and eventually cash out the spare for my personal use.

White lists could be created for your friends to auto-refund their money. Blacklists would delete the spam before you see it, money staying in your account.

approach to fighting spam. Your idea will not work. Here is why it won't work. (One or more of the following may apply to your particular idea, and it may have other flaws which used to vary from state to state before a bad federal law was passed.)

( ) Spammers can easily use it to harvest email addresses(*) Mailing lists and other legitimate email uses would be affected( ) No one will be able to find the guy or collect

Adsense is essentially a micropayment platform as is Y! ad technology, consider:
1 your click transfers money from advertiser to adsense
2 they are concerned about 'click fraud'
3 advertisers will pay *anyone* to get you to look at their stuff; google and others offer you services in exchange for you looking at the ads they sell

Will it kill PayPal? No. Will it bite them a bit? To be sure. No matter what Google will use, as long as it offers a secure means for an online transaction, it will hurt PayPal... but they'll survive...

in other news google has anounced a new project called gclock google's CEO was quoted as saying "now not only shall we control the internet, but we shall also control time also! <evillaughter>MUAHAHAHAHA!!!</evillaughter>*choke* *cough*...err...i mean 'don't be evil' yeah that's it!"

Pure speculation:It could be that Google is going to start using this system for their [advertising] customers in Beta, with an eye toward braching out to the more general public in future [insert jokes about Google beta here]. I'm fairly confident that there are more people using Google than PayPal (I know - apples and oranges), so market exposure would not be an issue either.

I agree with you that it would be very interesting to see Google take on eBay/PayPal. In fact, it could almost be billed as the clas